Well, as I’m likely going to be a member on the loot council (tank lead) in my Classic guild, I can give you a few pointers.
The first thing to understand that’s a big difference between retail and Classic is how much loot matters and how rare it is. Bosses only drop two pieces of loot for 40 people, and Classic is predominantly gear checks until you get to Naxxramas.
A loot council’s job is to distribute loot in a way that best benefits the progression of the raid, so that you can kill more bosses in the most efficient way possible. Typically, this means prized pieces of loot will be given out in a way that maximizes the raid’s performance; often this means awarding loot to the top performers and people with the best attendance in the raid. Note, however, that it’s a bad strategy to constantly pile loot on the same people, so often they will factor in how big of an upgrade it is. If your best mage already has good gear, but your second best mage is wearing a pile of crap, then you would hands down give it to the second best mage, because that’s the largest potential DPS increase. Make sense?
EDIT: Decisions are often resolved by vote, and the additional tie breaker we use is /roll.
There are other common rules like giving your main tanks priority on a lot of gear, because the amount of threat they put out is an effective cap on the total amount of DPS your raid can do without pulling threat and wiping the raid. So increasing that cap is the easiest way to increase raid DPS.
The true reality of it is, no one gets geared quickly in Vanilla. It just doesn’t happen. You’ll get loot eventually; it’s just a means to clearing the content, after all.
As to your second question, farming gold and consumables (which are heavily, heavily needed in Vanilla) is very much appreciated, and a core to any successful raid. That being said, I don’t know how much it will factor in to loot council decisions, if at all. It will, however, make people think of you in a positive light and appreciate you. Even if you aren’t raiding, but you’re farming that Black Lotus for the guild, you’re a true hero.
Lastly, do not go into Classic focusing on loot. It is a very bad look, and people will not appreciate this. Loot is just the souvenirs of the journey. Keep rolling along, and the loot will come naturally.